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Australia to Buy China Bonds

SYDNEY—Australia has taken another step closer to its biggest trading partner with a deal allowing the nation's central bank, for the first time, to invest in China's sovereign bonds.

The Reserve Bank of Australia said it would invest up to 5% of its foreign currency assets—close to $2 billion Australian dollars (US$2.1 billion)—in Chinese government bonds, capping a string of agreements in recent months aimed at deepening economic...